What have I done - is this pathetic money management.

(29 Posts)
mulranno Wed 24-Oct-12 18:36:56

Today I bough a new car with a balloon payment financing deal at 5.8% APR. I have never bought a new car - but my old 2lt 7 seater wagon just drinks petrol costing me £80/week just to get to work. I dont ferry my kids around anymore and drive this empty bus to work on a minumum 3hr round trip each day 5 days a week. My thinking was that I would buy a small used car which would halve my petrol costs and the savings would pay for the loan to buy the small car - (wagon worth £500! needs £3k work) - so thought I wuld buy something for 7ish with a tesco loan so monthly payments would be £160 (petrol saving) - but got seduced at the garage by a new car £11k but managed to neg it down to 9,800 and it "ONLY" costs £154/month on their finanacing deal - but after 4 years need to give it back or pay £4k -- I have never done ths before. Is it just the same as getting a loan from Tesco - or is there a catch?

sparkle12mar08 Wed 24-Oct-12 18:42:03

I can hardly make head nor tail of the details but my instinct is screaming that you've been done over...

AdoraBell Wed 24-Oct-12 18:51:29

If you intend to buy it at the end of 4years then it's okay, but you will have paid a lot in interest. The problem is they'll be pushing another shiny new car in 4 years and while youcould just give the keys back and walk away, they want you to buy their new car and agree to another 4 year plan. And you'll still need a car.

hanglider Wed 24-Oct-12 19:00:49

Did you read the small print? When I looked at a deal like this you could only do 6000 miles per year - you were charged for every mile over this - I do about 12000...

Pooka Wed 24-Oct-12 19:04:38

Never buy brand new.

Yu just take the hit for the 1 year depreciation.

Better to buy something. Early new (I.e ex demo or 1 year old, so still within warranty) for around the original 7k mark. Or a Kia for example that have I think 5 years warranty.

Pooka Wed 24-Oct-12 19:05:00

nearly new.

spicandspan Wed 24-Oct-12 19:08:12

most big purchases / loans there is a cooling of period i think? so if on reflection you are not happy you might be able to cancel.
i have no idea if it was a good deal, but in general I think you're safest if you stick to 2 rules:
1. don't spend more than your budget
2. don't buy on credit

spicandspan Wed 24-Oct-12 19:08:53

off

Fluffycloudland77 Wed 24-Oct-12 19:15:56

You normally have 7 days to cancel.

Lots of people do at dhs garage.

mulranno Wed 24-Oct-12 19:20:00

Thanks - I will look up the mileage limit. When you say dont put on credit do you also mean dont use a loan to buy a car - or do you see this car finacing "deals" as different? The "budget" which I stuck to - was my petrol saving a month by changing to a small ecconomical car - so £160/month - and 5.8 APR sounds cheap (cheaper than the tesco loan?) But is the trick that you are paying interest on the whole 9,800 loan for the 4 years but you have to give 4k back at the end. Should I just buy it on a tesco loan?

Ex company fleet cars are sometimes a good deal - they have had a lot of motorway driving rather than short town hops (so the mileage, although high, is "good" driving).

Also they are serviced regularly (as the company pays for it) and any damages to them are fixed quickly.

Your deal is a total payout of £11,392 if you want to keep the car. If you don't keep it, you've paid £7,392 for it with no car to show for it.

imperialstateknickers Wed 24-Oct-12 19:29:04

Why do new car showrooms look so lovely and shiny? Who's paying for that lovely persuasive lad/girl offering you a fantastic deal that's a mere twice what you were planning to pay originally!

Cancel, get a loan from your bank for an amount you can afford, and get thee to Autotrader.

hellhasnofurylikeahungrywoman Wed 24-Oct-12 19:30:05

My son did this.

And regrets it bitterly.

Lizzylou Wed 24-Oct-12 19:32:14

Is this a personal lease not loan with a balloon payment?
A loan with balloon payment could be good as it keeps your monthly repayments low and if you sell the car/pay the balloon off at the end you own the car.
With a lease you never own the car, just rent it in effect and yes, there are almost always mileage limits.
You will have a cooling off period.
Tesco do ex-fleet cars now at good prices and with a low APR loan that may make it a more affordable option? At least there will be no nasty surprises at the end of the loan.

nkf Wed 24-Oct-12 19:37:11

The key red flag word is "seduced." You went to the garage with one idea and they talked you into something else. You didn't want that deal originally. You've paid £2,800 more than you intended.

hellhasnofurylikeahungrywoman Wed 24-Oct-12 19:37:33

We only pay a bit more than your payment for a car on 5 years 0% credit and at the end of 5 years it is ours. At the end of DS's 3 year agreement he walks away with nothing, he is limited to doing less than 9,000 miles per annum else he pays 21p (if I recall correctly) per mile over when he hands the car back. It seemed like a great scheme (to him, not us, we tried to talk him out of it) at the time but within 9 months of starting the agreement his circumstances changed and he is left paying for a car he can't really afford with no way of walking away. At least if he'd gone down the bank loan route he'd would've had a chance of selling it to clear the debt at some point.

MadMumToThree Wed 24-Oct-12 19:45:32

Our DS in exact same situation as hellhas DS - I wouldn't touch it personally - DS is bitterly regretting it.

mulranno Wed 24-Oct-12 20:09:42

How do you get 5 years 0% credit? Its not a lease but I havent considered that I am tied in for 4 years....

hellhasnofurylikeahungrywoman Wed 24-Oct-12 20:13:41

Ours is a Vauxhall, they offer between 24-60 months interest free on new vehicles.

hellhasnofurylikeahungrywoman Wed 24-Oct-12 20:14:41

They took our old heap Skoda that was on it's last legs off us for more than we expected too.

Blending Wed 24-Oct-12 20:22:22

Have you actually got the car yet?

If not most definately get a loan, which if nothing else would give you some flexibility.

My brother just had his car written off, after paying £14,500 off it. Because of the balloon payment at the end and the fact that with car finance it is secured against the vehical so insurence payouts must be paid direct to them , he has ended up with nothing to show for the last 3 years payments, not even a deposit for a new motor.

KirstyJC Wed 24-Oct-12 20:23:22

I thought I would never buy a new car, partly because it wouldn't be worth it with the depreciation and mainly because I thought I could never afford it.

But 5 years ago I bought a new Fiat Panda and it was the best thing I ever did. It was on a special deal with no deposit and 0% finance over 3 years, with no final amount to pay or anything, simply the overall cost divided into 36 monthly payments.

The car was much cheaper to run than our old car (I get approx 45mpg from it, petrol 1200 engine) and the monthly payments were £237. I finished paying it off 2 years ago and it has only just lost that new car smell!

However - I ONLY bought this because of the fantastic finance deal, and because I fully intend to keep it until it stops working permanently - hopefully not for a long time yet.

I don't know if anywhere has these type of deals anymore, but if you are looking for a cheap to run car and intend to keep it for years and years I would heartily recommend it. Maybe have a look at some manufacturers' websites? And definitely cancel the deal you just signed.

spicandspan Wed 24-Oct-12 20:27:26

credit is credit. does not matter whether it is car, house, whatever.

Most people cannot avoid needing credit to buy a house. But a car - it is possible to save up that much, so that would be first option. However, if it's not possible, you need to get online and find best possible deal for borrowing the amount you want, and buy the car outright. Thats what I would do, anyhow.

mulranno Wed 24-Oct-12 21:42:00

Thanks all -- you brought me to my senses. This isnt like me at all to be so gullible. I have decided to buy the 2 year old one in the dealership which was 3k cheaper - been on the tesco website and applied for £7.5K @ 5.7% APR over 5 years -- £143/month - so will cancel the new car order and dealership finance tomorrow

Fluffycloudland77 Thu 25-Oct-12 07:41:07

Ex company cars are the worst, they aren't serviced at all for three years and get totally butchered by the drivers.

Dh sends most of them to the auctions because you can't polish a turd (his phrase).

higgle Mon 29-Oct-12 12:09:00

I work for an organisation where most of the staff get about £200 fuel payments a month and need reliable cars for work. Many of them have a Citroen C1 or small peugeot on PCP finance. Their mileage payments cover the payments, they are cheap to insure and run and after 2 years tey start a new agreement. It is a relatively hassle free way to be sure you have reliable transport.

How did you get on op?

mulranno Wed 31-Oct-12 22:51:40

Did well actually, went back to dealership to cancel the lot - finance, new car order etc applied for cheap tesco loan and started looking at used on autotrader - but then got a call from the dealer to say they had a cancelled order (sign of the times) - so they had a new car with 10 miles on the clock and technically one previous owner as was registered to him - so I got it after haggling for 9000 when new is 11,400 - pick it up next week. My petrol saving will pay the loan -- delighted -- so thanks everyone for slapping me back to reality.

roxannedetierro Thu 22-Nov-12 10:05:48

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